WELD FUSE PRIVATE LIMITED,HYDERABAD vs. ACIT, CIRCLE 17(2), HYDERABAD

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ITA 12/HYD/2022Status: DisposedITAT Hyderabad23 February 2022AY 2019-203 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the disallowance was not sustainable. This was based on legislative amendments and CBDT clarifications which clarified that the provisions regarding disallowance of employee's contribution to ESI/PF apply prospectively from April 1, 2021.

What were the facts?

The assessee company claimed a deduction for ESI/PF contributions of Rs. 3,10,015. The lower authorities disallowed this amount. The assessee contended that the payments were made before the due date of filing the return under Section 139(1).

What were the issues?

Whether ESI/PF contributions paid after the due date prescribed by the respective statutes but before the due date of filing the return under Section 139(1) are allowable as a deduction.

Which sections of the Income-tax Act were involved?

Section 36(1)(va),Section 43B,Section 139(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad

Before: Shri S.S. Godara & Shri Inturi Rama Rao

For Appellant: Ms. Sandhya
For Respondent: Shri Rohit Mujumdar
Hearing: 22.02.2022Pronounced: 23.02.2022

Assessment Year: 2019-20 Weldfuse Private Limited, Vs. The Income Tax Officer, Hyderabad. Circle 17(2), Hyderabad (Order passed by ADIT, PAN : AAACW2119H. CPC, Bangalore). (Appellant) (Respondent) Assessee by: Ms. Sandhya Revenue by: Shri Rohit Mujumdar Date of hearing: 22.02.2022 Date of pronouncement: 23.02.2022 O R D E R Per S. S. Godara, J.M. This assessee’s appeal for A.Y. 2019-20 arises from the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi’s order dated 01.12.2021 in case No.ITBA/ NFAC/S/250/2021-22/1037409327(1) involving proceedings u/s 250 of the Income Tax Act, 1961 [in short, ‘the Act’].

2.

Coming to the sole substantive issue of ESI/PF disallowance of Rs.3,10,015/- made in both the lower proceedings, the assessee’s and Revenue’s plea(s) before us are that the same had been paid before the due date of filing Sec.139(1) return and after the due date prescribed in the corresponding statutes; respectively. We notice in this factual backdrop that the legislature has not only incorporated necessary amendment in Sections 36(1)(va) as well as u/s. 43B vide Finance Act, 2021 to this effect but also the CBDT has issued Memorandum of Explanation that the same applies w.e.f. 01-04- 2021. It is further not an issue that the foregoing legislative amendments have proposed employers’ contribution / disallowance u/s.43B as against employee’s contribution u/s.36(va) of the Act; respectively. However, keeping in mind the fact that the same has been clarified to be applicable with prospective effect from 01-04-2021, we hold that the impugned disallowance is not sustainable in view of all these latest developments. The impugned ESI/PF disallowance is deleted therefore.

3.

This assessee’s appeal is allowed in above terms.

Order pronounced in the Open Court on 23rd February, 2022.

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